Expert Systems with Applications 41 (2014) 5597–5604

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Expert Systems with Applications

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Innovation quality in knowledge cities: Empirical evidence of innovationaward competitions in Finland

http://dx.doi.org/10.1016/j.eswa.2014.02.0100957-4174/� 2014 Elsevier Ltd. All rights reserved.

⇑ Corresponding author. Tel.: +358 400 882 818.E-mail addresses: teemu@sam.sdu.dk (T. Makkonen), tommi.inkinen@helsinki.fi

(T. Inkinen).1 Tel.: +358 504 154 895.

Teemu Makkonen a,1, Tommi Inkinen b,⇑a Department of Border Region Studies, University of Southern Denmark, Alsion 2, 6400 Sønderborg, Denmarkb Department of Geosciences and Geography, University of Helsinki, PO Box 64, Helsinki 00014, Finland

a r t i c l e i n f o

Keywords:FinlandInnovation awardsInnovation policyInnovation prizesKnowledge city

a b s t r a c t

Innovation awards have for long attracted policy makers as a method for innovation promotion. Still, aca-demic research on innovation awards has thus far received little attention. In particular, empirical studieson the motives to enter award competitions and the realized impacts of winning an innovation award arescarce. This study addresses this research gap. Firm-level evidence, questionnaire data on innovationaward winning companies of the Finnish national Innofinland and Quality Innovation of the Year awardcompetitions, indicate that the motives for companies to participate in award competitions and the real-ized impacts of winning an award are largely the same: media coverage and a credibility boost. Theimportance of innovation awards in innovation policy was, however, considered only as mediocre ormodest. As a conclusion it can be stated that innovation awards are an additional tool for innovation pro-motion, alongside innovation inducement policies including tax reductions and direct funding, as theyproduce significant positive effects for the award winning companies, and an additional indicator of inno-vation quality in the context of knowledge cities.

� 2014 Elsevier Ltd. All rights reserved.

1. Introduction

In various spatially oriented streams of economic thought andinvestigation, including local clusters (Porter, 2000), regional inno-vation systems (Cooke, 2004) and knowledge cities (Yigitcanlar,Velibeyoglu, & Martinez-Fernandez, 2008b), methods for boostingthe innovativeness of cities and regions have gained significantacademic interest. Innovation awards have been positioned as anexample of such methods: innovation awards or prizes have forlong been discussed as important incentives for private firms toinvest in R&D and other innovation activities (Kay, 2012b;Urpelainen, 2012; Williams, 2012). Still, academic research on thesubject has been relatively scarce (Adamczyk, Bullinger, & Möslein,2012; Kay, 2011a, 2012a). This study aims to address this researchgap by discussing the benefits of innovation awards for firms andthe motives for their entry into an innovation competition with un-ique questionnaire data gathered from Finnish innovation awardwinning companies: the data focuses on two Finnish (ex-post)innovation award competitions, namely Innofinland and Quality

Innovation of the Year (QIY) awards. The aim of this study is firstto explore the motives to enter such award competition and sec-ond to investigate if innovation awards bring significant benefitsto award winning companies.

Innovation awards have already received professional attentionfrom the city planners in regard to the concept of knowledge cities.In Guangzhou, China, the city officials are implementing methods,including the Guangzhou Technology Innovation Award, for inno-vation-oriented city construction. The award is also designated toaid the optimization of the local business environment for innova-tive talent (Guangzhou Municipality, 2013). Accordingly, the city ofRotterdam, the Netherlands, has plans for linking innovationawards in their policy to characterize themselves as a knowledgecity (City of Rotterdam Regional Steering Committee, 2009). Thus,there is a potential but still underutilized connection betweeninnovation awards and the (urban) knowledge-based develop-ment. This leads us to review innovation awards in relation tothe concept of knowledge cities and to conclude with a policy dis-cussion concerning the use of innovation awards as a governmentpolicy instrument as well as a tool for developing knowledge cities.The study, thus, replies to the call voiced by Kay (2011b) to usequestionnaire data in order to gain a better understanding of theactivities of innovation competition participants. Our specific re-search goals are:

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(1) To provide a literature-based view on the significance ofinnovation awards and their implications for the knowledgecities.

(2) To answer the following empirical research questions:

a. What were the initial motives to enter the competition?b. What were the perceived benefits after the award was

granted?c. What implications for innovation policies do the results

entail?

In relation to the terminology used, innovation prizes and inno-vation awards can be seen as close relatives. Still, one can make adistinction between these two. Although, awards are also referredto as grants, as is in the case of small business innovation researchprograms (Salles-Filho, Bonacelli, Carneiro, Castro, & Santos, 2011;Wessner, 2009a), they do not necessarily include a monetary re-ward, whereas prizes are most often monetary in nature. Thus,the motivation for entering the award competition had to be de-rived from sources other than instant monetary gain. This notionlays the foundation for the motivation behind our researchquestions.

2. Foundations: innovation policy as context for awards

Governments and international organizations are currently fol-lowing the techno-scientific development paradigm in order toboost their economic and knowledge-based development. There-fore, the modes of innovation policy and innovation inducement(or incentives) have received a great deal of attention from policymakers and academics alike. In particular, research on govern-ment-led innovation inducement has been prolific in environmen-tal economics, that is, when discussing eco-innovations (Veugelers,2012). The link between innovation and economic growth has forlong been almost unquestionably at the center of debate on devel-opment economics as well as business and management studies(de Bruijn & Lagendijk, 2005). Thus, promotional tools for enhanc-ing the innovativeness of firms, regions and nations are perceivedto be of utmost importance in the development of innovation pol-icies of, for example, the European Union and individual govern-ments (European Commission, 2010). The promotional aspect ishighly important for cities in which the award winners locate.Award competitions are therefore additionally tools for firm-basedcluster marketing for cities aiming to promote their knowledgeimage.

Innovation policies aimed at inducing innovation can be labeledas: (i) technology-push (ex-ante) and; (ii) demand-pull (ex-post)policies. Technology-push policies are measures targeted at reduc-ing costs to firms’ for producing innovations. These public policiesinclude for example direct government funding for R&D, tax creditsor reductions for companies to invest in R&D, support for trainingand funding demonstration projects. Demand-pull policies arethose actions that are targeted at raising the payoff for successfulinnovations. These include policies such as intellectual propertyprotection, tax credits and rebates for consumers of new technolo-gies, government procurement, technology mandates, regulatorystandards and taxes on competing technologies (Nemet, 2009).According to this dichotomy, innovation awards can be consideredas a demand-pull policy option, as they are, as their name suggests,awarded to already existing inventions rather than R&D activities(Jeffrey, Jay, & Winskel, 2013). Innovation awards are, thus, de-signed to increase the payoff of successful innovations.

Current innovation literature has recognized the importance ofawards and prizes as an external impetus for motivating firms togain prestige for their innovations. In a recent account, Adamczyket al. (2012) summarized an extensive literature review of

innovation contests. They provided a detailed classification onthe terminology of innovation contests including several relatedterms. However, ‘award’ was missing from their account and thiscontributed to our decision to concentrate on innovation awards.Award winning companies provide an interesting study platformas they may be approached as a particular category of company(i.e. considered successful because they have been given an award).Thus, there are relations to ‘best practices’ or ‘best performers’ andinnovative examples of successful business. Caird (1994) producedone of the early studies focusing on awarded SMEs from the UnitedKingdom’s Government sponsored Small Firms Merit Award forResearch and Technology (SMART). The study however focusedon innovation processes, that is, on finding where ideas for anew product, service or process come from, not on the significanceof the awards themselves. Accordingly, Larsen and Lewis (2007)studied relevant questions from the problem solving point of view,namely on how award winning SMEs manage their innovation bar-riers. Their data involved eight innovative firms from differentfields and the study results indicate that understanding SMEbehavior and innovation creation involves a mixture of coping withcommonly recognized elements on funding problems (consistencyof finance), research management, human resources (staff turnoverand production skills), logistics and marketing.

Accordingly, economists (Nalebuff & Stiglitz, 1983; Rogerson,1989; Wright, 1983) have long claimed that under certain condi-tions innovation prizes can induce innovation, that is, provide pri-vate entrepreneurs with strong incentives to invest in R&D. Inparticular, the interest has been in innovation prizes as an alterna-tive to patent systems in invention appropriation (Chari, Golosov,& Tsyvinski, 2012; Clancy & Moschini, 2013; de Laat, 1996;Hopenhayn, Llobet, & Mitchell, 2006; Masters, 2005; Scotchmer,2004). What literature there is on innovation awards has, however,been mainly confined to studies concerning the innovativeness of(public) management (Altshuler & Behn, 1997; Bernier & Hafsi,2007; Borins, 2008) instead of the realm of technological innova-tion, where the majority of innovation studies are found (Kalil,2006). Additionally, innovation awards and prizes have been usedin choosing case studies and in delineating samples (Gemünden,Salomo, & Hölze, 2007; Simmie, 2004) and as a measure of the sup-port received and the successfulness of innovative activities atfirm-level (Laforet, 2009; Romjin & Albaladejo, 2002). The assess-ment processes aimed at evaluating and prioritizing inventionsaccording to their innovation potentials have been broadly definedin the expert systems literature as ‘innovation intelligence’ (Dereli& Altum, 2013). Still, as Kay (2011b: p. 360) has noted, ‘academicresearch, however, has barely investigated these prizes in spite oftheir long history, recent popularity, and notable potential’.Similarly, Wei (2007) reports a lack of empirical research on theeffectiveness of prize systems.

Moreover, the scant empirical evidence on innovation awardsand prizes is inconsistent. Already in the nineteenth century theFrench Academy of Sciences saw limitations in rewarding a fewsuccessful examples of research (Crosland & Gálvez, 1989). Accord-ingly, Wei (2007) has stated that innovation prizes are not trouble-free incentives as the grounds for their presentation are more orless subjective, which raises the question of how to determinewhich innovations deserve a prize (see also Heinze, Shapira,Senker, and Kuhlmann (2007) for scientific prizes and Yang andHsieh (2009) for quality awards). Moreover, in giving a prize to aselected few there is a risk of discouraging other high-qualityinnovators. Thus, criticism has been voiced regarding the feasibilityof prize systems (Wei, 2007) and questions raised as to whether aprize can sustain the commercial development of a prize-winninginnovation (Davis & Davis, 2004; Larsen & Lewis, 2007). Expertsystems are recognized here as useful tools in the evaluationprocesses of award competitions (Chen & Chen, 2009).

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The proposed motives to enter innovation competitions can begeneralized into two types of factors: (i) monetary and; (ii) non-monetary rewards. Firstly, monetary rewards are obviously one rea-son for entering innovation prize competitions. However, a smallcash reward might not even cover the costs of the R&D involvedand, thus, be an inadequate incentive to invest in R&D. Therefore,monetary rewards do not completely explain the willingness offirms to enter such competitions (Kay, 2011b). Secondly, there arethe benefits of increased publicity, credibility and reputation. Thisview stresses, that competitors might grasp the ‘advertising’ impactof winning an award as more important than the purely cash dimen-sion of any such award (Brunt, Lerner, & Nicholas, 2008; Stine, 2009).Therefore, non-monetary rewards are at least equally important inexplaining why companies and organizations participate in awardcompetitions (Murray, Stern, Campbell, & MacCormack, 2012).

As discussed by Caird (1994), the difficulty for award winninginnovators is not in getting ideas, but in estimating which of theseideas have market potential (again, expert systems should be con-sidered as tools in the evaluation process). However, not everyoneis as grim, as earlier results of the studies by Borins (1998, 2000,2001) contradict these skeptical views on innovation award win-ners’ survival and replication with empirical data. This shows thatcreativity, innovation and firm-level competitive advantage areinterlinked (Bassett-Jones, 2005): statistical tests have providedstrong evidence that the performance of award winning firms issignificantly higher compared with other firms (Nicolau &Santa-María, 2013; Zhang, Yu, & Xia, 2012). Similarly, Azadeganand Pai (2008) associate product innovation awards to direct salesgrowth and performance. However, the effects of awards oninnovation and creativity are anything but straightforward(Eisenberg, 1999).

3. Implications: awards as an indicator of innovation quality inknowledge cities

The knowledge city concept has definite connections with inno-vations awards. Knowledge cities, as proposed by Yigitcanlar,O’Connor, and Westerman (2008a), can be considered in the contextof encouraging and nurturing locally focused innovation as a way tostrive towards a more viable, vibrant and sustainable form of urbandevelopment. Accordingly, the outcomes of knowledge-based (ur-ban) development processes can be observed through the economicgrowth in a city, which is a direct or indirect result of technologically(or educationally) induced advances in productivity (Carrillo, 2009).Thus, one way of measuring and benchmarking the knowledge-based development capabilities and innovativeness of (knowledge)cities is through the quality and numbers of innovation.

Innovation awards offer an extremely interesting and usefuladditional indicator for measuring the innovativeness of (knowl-edge) cities, because they, as such, also contain a certain degreeof reliable information concerning the quality of the innovationsproduced in a region or city: a city producing salient numbers ofaward-winning innovations (expectedly) possesses favorableconditions for these quality innovations to emerge. Accordingly,innovation awards could be directly utilized as a measure forinnovation recognition and support in international or nationalbenchmarking frameworks such as the ‘‘Knowledge-Based UrbanDevelopment Assessment Model (KBUD/AM)’’ (Yigitcanlar &Lönnqvist, 2013).

These notions bring forth interesting insights into the quality ofinnovations produced in Finnish cities, since a large proportion ofthe award-winning innovations have actually been introduced out-side the most obvious place to be designated as a knowledge city inthe Finnish context, namely the capital region of Helsinki. Thus, itseems that knowledge cities can definitely arise outside the largestcity centers in smaller and more peripheral locations. Investigation

on the enablers and facilitators of the high-quality innovations out-side the settings of the largest cities (i.e., second-tier cities) andeven peripheral locations should produce interesting insightsregarding the dynamics of innovation creation and urban knowl-edge-based development. Studies focusing more directly into theuse of innovation awards as an indicator of innovativeness alsoin the regional or city perspective (in addition to the firm-levelanalysis conducted here) are needed to verify these propositions.

4. Empirical backgrounds

4.1. Innovation award competitions

We focus on two prominent Finnish innovation award competi-tions, namely Innofinland and Quality Innovation of the Year (QIY)awards. The national Innofinland (2013) awards (established in1994, cancelled in 2011) were presented each year to acknowledgeand encourage innovative entrepreneurship. The award was aimedat promoting the development of novel inventions into commercialproducts or services and was designed to induce innovation andspur new business activities, but included a monetary prize onlyin some specific years prior to 2001. It provided opportunities forentrepreneurs, inventors, public administration officials, finan-ciers, counseling organizations and associations in the field to net-work and collaborate. Innofinland emphasized the importance ofinnovative small and medium-sized companies (and draws specialattention to Finnish regional and urban characteristics in terms ofknowledge-based development), but the award could have equallywell be presented to organizations or private persons whose ideas,inventions or innovations had significantly promoted creativity,entrepreneurship, co-operation and employment in Finland.

The Innofinland award competition included a regional qualifi-cation round. In order to enter (in one region only), firms needed tosubmit the entry form and the accompanying documentation tothe Innofinland bureau. Moreover, each year there was a specific,but loose, theme that the innovations had to address to be eligiblefor the award. The entries were treated as confidential, but it wasthe responsibility of the participant to consider whether to applyfor protection by industrial property rights prior entering the com-petition. One to three entries from the regions continue to thenationwide contest. The Innofinland Jury nominated the candi-dates for award winners (commonly five awards were given annu-ally). The Jury comprised representatives from several Finnishadministrative and science and technology funding bodies, whichhave a pivotal role in the Finnish national innovation system(Ramstadt, 2009), including the Ministry of Employment and theEconomy, the Foundation for Finnish Inventions, the Central Cham-ber of Commerce of Finland, the National Board of Patents and Reg-istration of Finland, the Finnish Innovation Fund (Sitra) and theFinnish Funding Agency for Technology and Innovation (Tekes).The President of Finland acted as patron of the project. Thus, Inno-finland awards can be seen as an attempt by the Finnish govern-ment (and by the whole innovation system) to gain higherreturns on its significant investments in R&D (Wessner, 2009b).The grounds for the awards included:

� The idea, invention or innovation had substantially promotedbusiness activities.� The activities had furthered the introduction of inventions on

the market.� The innovativeness of the product or service and the advantage

to the customer.� The continuity of activities; R&D and level of technology; pro-

motion of employment and the competitive situation in thefield.

Table 1Innofinland and Quality Innovation of the Year award winning companies in Finland:Total population, the sample and number of questionnaire respondents.

Innofinland(1994–2011)

Quality Innovation ofthe Year (since 2007)

Total

Total population 113 21 134Our sample 76 21 97Respondents 23 7 30

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The second innovation award competition under study here, theQIY award of the Laatukeskus Excellence Finland (2013) has beengiven annually since 2007. Its purpose is to increase the amountand quality of innovations in Finland. At the same time the QIYaward competition acts as an audit of the feasibility of the innova-tion: every firm receives a written assessment aimed at aiding infurther development. There is, however, no monetary prize. Theaward has distinct competition categories for public administra-tion as well as for small, medium and large enterprises. The awardis granted on the basis of the products’ or services’ innovativenessand quality:

� Novelty value.� Usability.� Utilization of new knowledge.� Customer orientation.� Effectiveness.

The nominees, based on the audit by the Laatukeskus Excel-lence Finland and expert assessments, for the award are judgedby a selected jury. As in the case of Innofinland, the President ofFinland has personally presented the awards for the eventual win-ners at the Gala Event (recent winners include for example RovioEntertainment for the development of the Angry Birds mobile gameand STX Finland for the planning and construction of the world’slargest cruise ship, at the time, Oasis of the Seas). Firms enteringthe competition have to pay a small participation fee and fill inthe necessary application form.

4.2. Survey data

The questionnaire was formulated following the basic princi-ples of the Community Innovation Survey of the European Unionwith specific questions concerning the innovation awards. Addi-tionally, the questionnaire was constructed by utilizing earlierempirical and conceptual studies complimented with basic back-ground information concerning the firm (size of the company interms of annual turnover and employees, home region, field ofoperations) and the award winning innovation (novelty, type anda short description of the award winning innovation plus the yearthat it was awarded). The feasibility or value of the innovation wasestimated by using its availability or existence in the market as asign of ‘success’.

The motives to enter and the realized impacts of the innovationawards were listed following earlier literature on innovation awardcompetitions (Azadegan & Pai, 2008; Brunt et al., 2008; Kay,2011b; Murray et al., 2012; Stine, 2009) such as: (i) monetaryprize; (ii) sales boost; (iii) media coverage, and; (iv) credibilityand reputation boost. The questionnaire also featured open-endedquestions for indicating any additional motives for why the com-panies had entered the innovation award competition and any im-pacts that winning the award might have produced. Moreover, weasked the respondents to give their opinion on the importance ofinnovation awards (compared to, for example, tax reductions anddirect funding) in innovation policy.

The data was collected via a targeted firm-level online survey.E-mail addresses provided by the innovation awards’ web-pageswere used as the initial contact persons when available; otherwisethe CEOs, managing directors or directors of R&D were contacted.Of the 134 companies that have won the awards, the 97 firms thatwe were able to identify with up-to-date contact details wereasked to participate in the survey. When researching the contactdetails we encountered suggestive data on the reasons behindthe loss from 134 to 97 companies: (i) of the initial award winnerssome have evidently disappeared from the ‘map of Finnish firms’

due to mergers and buyouts (which can also be seen as a sign ofsuccess), but however, (ii) some of the award winning companieshad gone through bankruptcy or closure. The data collection (fromDecember 2012 to February 2013) included three rounds (tworeminders). We received 30 responses, of which 87% were SMEsand 13% were large enterprises. Our data thus covers a fair re-sponse rate of 30.9% (Tables 1 and 2).

In terms of representativeness of the data, Table 1 shows thatthe data is more extensive on coverage for the QIY award (responserate 33.3%). Considering the representativeness of the data it is rec-ognized that each award is unique and the competitions cover allfields of industries. Therefore, the possibilities for generalizationsare limited in the first place. This reflects to the fact that companyspecific independent variables yielded non-significant results forco-variance of dependent variables (award significance and theirimpacts on experienced benefits): Table 2 provides an overviewof this diversity in terms of company size categories and fields ofoperations.

Tables 1 and 2 indicate that the awarded companies are from adiverse field of industries. Interesting finding is that ICT and bio-technology sectors have gained relatively few awards, consideringthe weight that has been placed to the promotion of these indus-tries in the Finnish national innovation system. The survey datais comparable to the official listing of award winners (Innofinland,2013) verifying this absence. An important notion from Table 2 isthat award winners represent a variety of cities. Particularly Inno-finland awardees are from small and peripheral cities compared toQIY recipients that are all, except for one, from the capital region ofHelsinki (Helsinki and Espoo).

5. Results

Tables 3 and 4 give us an overview on the award winning inno-vations. The awarded innovations are to large extent (60.0%) prod-uct innovations. The awarded innovations are new globally and,thus, they are targeted at international markets. A minority ofthe awarded ‘innovations’ were up-dates or enhancements to al-ready existing products, services or processes. The developmenthad been halted before entering the markets in only one out ofthe award winning inventions, the rest are available, in productionor under further development. This signals success in terms of thedemand for award winning innovations. Thus, award-winninginnovations can be considered as feasible in terms of their com-mercial value and high quality. However, a bias towards respon-dents with successful innovations compared to those that havenot succeeded and the fact that most respondents had receivedthe award quite recently are more than likely to play a part inthe reported (high) success rate. Still, another main interpretationis that innovations awarded in the studied innovation award com-petitions are durable in time and have at least some marketdemand.

Table 3 indicates interesting tendencies in the profiles ofawarded projects. During the latter part of the Innofinland awardyears (2005 onwards) the awarded innovations have slightlymoved from process innovations towards service innovations. Evenconsidering the coverage of our data (30.9% of all awards) the

Table 2Innofinland and Quality Innovation of the Year award winning respondents in the data.

Award Home office location Main field of operations Annual turnover in Euros (2011) Number of personnel

Innofinland Pirkkala Design and manufacturing of machinery 1,200,000 14Kuopio Welfare technologies 300,000 3Varkaus Components and devices for paper industry 35,000,000 120Vaajakoski Measurement devices 8,000,000 80Helsinki Production and development of tools 3,000,000 4Joutseno Steel industry 17,100,000 30Tampere Research and development 1,000,000 12Turku Retailing 700,000 3Pori Internet services 4,000,000 30Pori Production and devices for handicap people 360,000 4Nummela Recycling textiles 1,400,000 15Rauma Environmental technology 4,500,000 20Kauniainen Music education on the internet 250,000 5Rovaniemi Security technologies 600,000 3Oulunsalo Steel industry 1,900,000 20Kotka Chemistry 2,000,0000 8Salo Steel industry 4,500,000 30Jyväskylä Welfare technologies 2,000,000 25Lappeenranta Product development 350,000 10Savonlinna Machinery for agriculture 4,000,000 20Vihti Building materials 500,000 –Joensuu Computer programs 100,000 2Ulvila Information technology 150,000 5

QIY Helsinki Machinery for agriculture – 3Helsinki Construction 200,000 4Helsinki Targeted methods of payment 74,000,000 37Helsinki IT and software 100,000,000 1000Lahti Electronics 120,000,000 670Espoo Planning 32,000,000 465Espoo Forestry 1,300,000,000 850

Table 3Characteristics of the awarded innovations.

Award Year Description Product innovation Service innovation Process innovation Other innovation

Innofinland:1996 New latch design and technology x1999 Testing tool for commercialization x2001 Pipe saw x2001 Modulation for metallic furniture x2003 A compact part for paper machine’s wet component x2003 Mixing technology for processing industry x2004 Tool for measuring stress x2004 Automated production method x2005 Facade system x2005 Standing support for disabled x2005 Design products based on recycling x2005 Concentrate of sunscreen for cosmetics industry x2005 N/A x2006 Construction online portal x2007 Safety product innovation x2008 Water purification system working on surface flows x2010 Outfit for surgery patients x2011 Test bed for guidance system x2011 Tool for customer satisfaction measurement x2011 5-Axes CNC-machinery x2011 Production development simulator x2011 Life cycle management for individuals x2011 Online teaching of music x

Quality Innovation of the Year (QIY):2007 Sports voucher x2010 Online ordering solution for welding x2010 Pluming service concept x2011 Online support system for moving work x2011 Forestry robot for timbering automation x2012 N/A x2012 Real-time quality index for pulp production x

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Table 4Characteristics of the awarded innovations.

The type of the winning innovation Responses (%)

Product innovation 18 (60.0%)Service innovation 6 (20.0%)Process innovation 4 (13.4%)Other 2 (6.6%)

Novelty of the winning innovationNew for global markets 22 (73.3%)New for domestic markets 2 (6.7%)Improvement on existing product, service or process 5 (16.7%)I do not know 1 (3.3%)

Is the winning product, service or process still available/in productionYes, the product is in production/available 27 (90.0%)No, but it is under further development 2 (6.7%)No, the development process has been halted 1 (3.3%)

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tendency seems evident. Similarly QIY award responses do notinclude any process innovations. The awards are strongly focusedon actual products and to traditional production industries suchas forestry, metallic industries and construction (cf. Table 2).

Innovation awarded inventions are clearly considered to have apotential for impacting global markets. The results also verify thatthe awarded innovations have clear market demand still after sev-eral years of receiving the award (90% of innovations are still avail-able or in production). Thus, innovation award competitions havebeen successful in identifying resilient products, services andpractices.

Table 5 provides a descriptive answer to our first main ques-tion: What were the initial motives to enter the competition?There are two main interpretations concerning the differences ofmedians and modes for each category in Table 5. First, the aim ofincreasing sales was initially the main drivers for companies to en-ter the award contest (mode of the results). In terms of averagescredibility and reputation was considered slightly more importantthan media coverage and sales boost. The respondents in enteringthe awards contests did not consider monetary gain in the form ofprize money an important motive. This is of course more due to the

Table 5Motives for firms to enter innovation award contest.

Why had the firm entered the innovation contest?(1 = no importance; 7 = highly important)

Average Median Mode

Aim to obtain monetary prize (granted before2001)

1.9 1 1

Aim to increase sales 4.9 5 7Aim to increase visibility in media 5.6 6 6Aim to increase credibility and reputation of the

firm (e.g. in the search for funding)6.0 6 6

Table 6The impacts on firms after the award.

N (%)The impact of the monetary prize for the firmNo significance for the firm 3 (10.0%)Monetary prize not received 27 (90.0%)

The impact on media coverageWe gained media time in local media (city/municipal) 6 (20.0%)We gained media time in national media 18 (60.0%)We gained media time in international media 2 (6.7%)We did not gain media visibility after the award 4 (13.3%)

fact that a monetary prize was given out for only Innofinland win-ners and only in the early years of the award, namely, before 2001.Additionally, in a few cases the respondents reported that they hadbeen asked to participate in the award competition by their stake-holders or other third-party actors.

Table 6 provides answers to the second empirical question (2b)of the paper. The media coverage of the innovation awards may beconsidered good in the national and local media. Still, the mediavisibility is mainly national: only two respondents indicated thattheir innovation award led to international visibility. The awardalso had some minor impact on the sales of the award winningcompanies, but many respondents reported no significant boostin their sales. The credibility and reputation impact of the awardwas considered to have had the clearest impact on the respon-dents’ performance in that it further helped to secure finance.The innovation award was (and still is) also often used in theaward winners’ marketing strategies as a sign of high levels ofcompetence. Moreover, some firms reported that winning theaward had positive impacts on the ‘factory floor level’ in that it in-creased the interest (and pride) of the personnel for product devel-opment. From the few companies that did receive a cash prizenone considered it to have had even some impact on their com-pany’s performance.

In short, the motives to enter the award competition and therealized impacts of winning the innovation award go largelyhand-in-hand. In terms of averages, credibility was perceived asthe most important and the monetary prize as the least importantreason for entering the award competition. Similarly, the credibil-ity boost from winning the award had the clearest and the impactof the cash prize the lowest significance for the performance of theaward winning companies. Still, 30% of respondents reported agrowth in sales due to the award. Thus, the highlighted benefitsof winning the award consist of the direct financial impacts andthe indirect benefits resulting in financial gains after a certain timelag. Only one respondent reported that the innovation award hadhad some negative impacts (in creating unhealthy competition be-tween suppliers). It, thus, seems that firms gaining from one aspectof the realized impacts were, to some extent, likely to gain fromanother: there are evident differences in the abilities of award win-ning companies to take full advantage of the awards in terms ofcredibility, media coverage and sales.

The relatively small sample size, even with a reasonable re-sponse rate, remains a limitation of this study. A cross-countrycomparison or a combination of data from different internationalinnovation awards might overcome some of the problems relatedto the small total population of award winning companies in Fin-land. Similarly, some caution is needed with the novelty aspectof innovation, when the data is constructed with questionnaires;firms have been reported to overestimate the newness and unique-ness of their innovations (Danneels & Kleinschmidt, 2001). How-ever, due to their expertise they are, at the same time, in the

N (%)The impact for salesThe sales grew significantly 1 (3.3%)The sales grew marginally 8 (26.7%)The sales remained the same 13 (43.3%)I am not able to identify the impact 8 (26.7%)

The impact on company reputation and credibilityThe award had a significant impact 7 (23.3%)The award had a minor but distinct impact 20 (66.7%)No, the prize had no impact 2 (6.7%)I do not know 1 (3.3%)

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best position to assess the novelty of their products, processes andservices, even if some subjective bias towards exaggerationmight exist. Therefore, keeping in mind the fair response rate, itis reasonable to state that the data and results presented hereare representative of the two innovation award competitions un-der examination.

6. Discussion and conclusion

The answer to the first empirical research question (2a) is thatthe initial motives to enter innovation award competitions arenon-monetary—benefits and reasons to enter are to be found frommarketing gains and, accordingly, the answer to the second empir-ical research question (2b) is that the obtaining of an innovationaward contributes to the image aspect of innovation creation:the recipients of these awards appreciated credibility and reputa-tion. Success in innovation award competitions is a clear signalof the high quality of an innovation and the gains from a credibilityboost and extra media coverage for an individual company are sig-nificant. For the participants, award contests and competitions are,thus, parts of marketing strategies aiming to enhance product (andcompany) reputation. The financial attributes (growth in sales, di-rect income) are secondary to image creation as a tool for market-ing. However, it seems that companies gaining in one aspect of theaward were, to some extent, likely to gain from another, signalingthat there are differences between the abilities of companies to ex-ploit the momentum attained from winning the award.

In terms of their feasibility as part of innovation policy (theempirical research question 2c), innovation awards may be consid-ered as a good supporting tool. They are not that important in thatthey would significantly encourage firms to invest in innovativeactivities, if considered independently from other innovationpromotion methods, but can be considered as an important imple-ment against which to benchmark different innovations (expertsystems provide valuable tools for this). The importance of innova-tion awards as a medium for innovation policy—compared to forexample, tax reductions and direct funding—was considered onlyas modest (average score 4.6 out of maximum of 7). The mediocrescore on the importance of innovation awards as a tool for innova-tion policy signals a greater need for monetary technology-push(ex-ante) policies such as direct funding for firms compared tothe demand-pull (ex-post) non-monetary rewards gained fromthe award. These policies are related to the governments’ toolselection involved in the practical execution: innovation awardsare one example of this policy arsenal, but other methods for pro-moting innovation are also called for.

The examples from Guangzhou and Rotterdam imply that thereis a potential for using innovation awards in the creation anddevelopment of knowledge cities. As shown here, companies arekeen on participating in innovation award contests and considereven the non-monetary rewards of winning an award as beneficialto their company reputation and day-to-day operations. Thus, cityspecific innovation award competitions might work reasonablywell in heightening the innovative output of a given city. However,as in the case of innovation awards as a policy tool, city officialsshould consider the combination of both technology-push, forexample by establishing funds for developing promising ideasand supporting auspicious start-ups, as well as demand-pull meth-ods in retaining and attracting innovative talent and companies.The mere ex-post acknowledgement of innovative companies isnot enough to encourage them to invest on R&D and other innova-tive inputs.

Innovation awards, as proposed here, can serve as a valuableindicator of innovation quality also in the context of knowledgecities. More comparable quantitative and qualitative research is

needed to confirm the empirical notions reported here in otherspatial competition contexts. Additionally, the question of placepromotion and external economic benefits for cities and regionscaused by the award competitions require further attention. Forexample, the spatial distribution analyses of externalities of theeconomic impacts of award winning companies provide a potentresearch agenda for the future studies.

Acknowledgement

We are grateful to the survey respondents for their time and ef-fort as well as to the special issue guest editor and two anonymousreviewers for their comments on improving the paper.

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